In 1993 I spent a year travelling around India, researching a book about small towns. I had grown up in the small towns of north and central India in the 1970s and 80s. But what I saw came as a revelation. A new kind of energy and confidence animated many of what in my memory had been sleepy provincial towns. Clearly, the liberalisation of the economy had unleashed fresh possibilities and impulses.

But many more places, left behind by the new high-skills-based economy, had stagnated. Globalisation has sucked the life out of many American and European towns. India's growing economy has had a more uneven effect: while adding glossy new suburbs to the metropolitan cities of Delhi, Mumbai and Bangalore, and revitalising a few small cities and towns, it has bypassed many provincial centres, especially in the densely populated north, exposing hundreds of millions to swift civic decay and crime-infested politics.

Today I realise that I was witnessing on that trip the fading of India's first postcolonial middle class and a genteel-bourgeois culture that had largely flourished in provincial cities and towns. Much of this culture had been produced and consumed by an elite formed during colonial times. Consisting of government officials, doctors, engineers, teachers and other professionals, this elite was renewed and expanded by the post-colonial project of India's modernisation. It was seen as crucial in the national task of fulfilling what Prime Minister Nehru on independence day called India's "tryst with destiny". Men and women from this class built dams; they maintained railway lines and roads, taught at universities and technical colleges and, as civil servants, preserved law and order.

Though partly educated in English-medium or Christian-run schools, this elite was not as anglicised as the one in the cities; it sampled Enid Blyton and Agatha Christie and Cliff Richard (who was tremendously popular in India) but it drew its primary cultural nourishment from indigenous sources, from a variety of high- to middlebrow art forms.

In north India, its sensibility was shaped as much by the writer Shivani, the subtle chronicler in Hindi of quietly desperate middle-class women, as by Amin Sayani, the suave host of the popular music-request programme Binaca Geetmala on Radio Ceylon. A cultural archeologist could do no better than to look at the publications, now sadly defunct, of the 70s and 80s. It is hard to imagine today, as dozens of channels clamour for our attention, how in the days before television, much of our leisure time was spent reading - general-interest periodicals as well as fiction. To recite the name of some of these magazines - Saptahik Hindustan, Dharmayug, Illustrated Weekly of India - is to evoke what now appears to have been a blissfully unhurried period: lazy winter afternoons on a charpoy, a patch of sunshine on the green lawn, the taste of peanuts with jaggery and the leather-encased transistor erupting with the roar of crowds at Test matches in distant Madras and Calcutta.

Growing up, I looked up not so much to Delhi or Bombay as to Allahabad and Lucknow. These two great provincial centres of north India had produced some of the country's greatest political and cultural figures: not just the famous Nehru-Gandhi family and the Bachchans (the poet Harivansh Rai and his son, Amitabh, the Bollywood phenomenon) but also the singers Begum Akhtar and Talat Mahmood, and the flautist Hari Prasad Chaurasia. In the early 20th century, Allahabad University, the "Oxford of the East", had attracted some of the finest talent in the country.

For many of us in the provinces, Allahabad still appeared the perfect gateway to a job in the prestigious civil services; I was as vulnerable to its primary myth as thousands of students from poorer regions at the university. On my first visit to the pilgrim town in the early 80s, its glamour seemed alive in the broad, tree-lined avenues, the large bungalows with wide verandahs, and the Coffee House and Palace Cinema of Civil Lines, the old "White Town" created by British colonials in the 19th century.

When I went to live in Allahabad in 1985, however, I was shocked to discover that the place's glory days were long past. The city had been overwhelmed by the poverty and despair of eastern Uttar Pradesh and Bihar - among the poorest regions in the country. Its great artists and politicians were mostly dead or elsewhere; even those who stayed on in the city, such as the poet and translator Arvind Krishna Mehrotra, seemed to live in a state of internal exile.

The university was near collapse. The student body was polarised along caste lines. Shootouts often erupted on the campus. The library was closed to students. Classes tended to be impossibly overcrowded. Hopelessness hung over the hostels, where I met students who had spent long years, some more than a decade, at the university. They were, they said, "preparing" to take the entrance exams to the civil service. But the "coaching centres" in Delhi had long made such preparation an expensive affair, leaving students in provincial universities to fill out the application forms for salt inspector and other lowly, obscure jobs.

In 1999, when I returned to Allahabad to write about the parliamentary elections there, the chaos I had seen in the university had begun to overwhelm even the previously elegant Civil Lines. The city had experienced few benefits of India's liberalised economy. The job-creating industries promised to the city by successive politicians had not materialised. More had gravitated to crime, and even the middle-class elite in their bungalows were threatened by a mafia of real estate speculators who simply appropriated what they were not allowed to buy.

But I can't feel too sentimental about the loss of Nehruvian serenity. After all, it had depended upon largely invisible hierarchies of caste and class. Now, long-muffled peoples are building their own vindictive new hierarchies of power and wealth. Given the long decades of darkness they have known, they are in no mood to accommodate old elites. Democratic ideals and beliefs have aroused in them not so much a sense of reciprocal citizenship as an impatient expectation of what is owed to them. Their garish ways - the marble-and-glass architecture, the new cars with blue siren-lights, the rumour-mongering newspapers - invite derision. But there is no getting around the fact of their power. Many people I know from the old elite have sent their children to schools and colleges in Delhi and Bombay; some have already moved into retirement homes in the suburbs.

Perhaps this dwindling of middle-class culture was inevitable, part of the price of "progress". A generation ago, my own parents and their peers had moved out of their restricted settings and taken up jobs in remote cities and towns. Their children are now scattered across India (and increasingly across the world). Besieged by the usual middle-class anxieties of jobs and careers, we lose touch, forgetting names and faces. Few people show up when some of these children get married or have their thread ceremonies. Deaths and funerals have turned into lonely, often desolate affairs. Two years ago, one of my uncles, who was afflicted with Alzheimer's, watched his wife bleed to death after an accident at his home in a Lucknow suburb - a fate unimaginable in the close-knit world of his childhood.

Of course, the destruction of old bonds of family and community and shared culture has been faster elsewhere, in Europe, America - even China. Poverty and crime are more vicious in many American cities than in Lucknow and Allahabad. And, compared with the Indian poor, who are perennially at the mercy of criminals and corrupt policemen, the old middle class is still relatively protected.

Still, it is hard today, 60 years after independence, not to see poignancy in the Nehruvian elite's tryst with destiny; to realise how little the makers of modern India knew of their suburban future: the high-rise apartment complexes in which they would die pining for a patch of weak wintry sun on a green lawn.

· Pankaj Mishra's latest book is Temptations of the West: How to be Modern in India, Pakistan, Tibet and Beyond.